Obama to Congress: It's time for a deal

President Barack Obama called on Senate leaders to hammer out a last-minute deal to prevent taxes from rising on Americans across every income group, warning that he otherwise would push Congress to allow an up-or-down vote on an emergency fiscal package just before the new year’s deadline.

Speaking after an hour-long meeting with congressional leaders, Obama called on Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell to cut a deal before the end of the weekend to prevent $500 billion in tax hikes and spending cuts from taking effect in the new year. Obama said he was “modestly optimistic” a deal could be reached, calling the 11th hour haggling before the fiscal cliff deadline “mind-boggling.”

“America wonders why it is in this town why you can’t get stuff done in an organized timetable. Why everything has to always wait until the last minute. We’re now at the last minute,” Obama told reporters at the White House briefing room. “The American people are not going to have any patience for a politically self-inflicted wound to our economy. Not right now.”

Obama said if no deal can be reached, the House and Senate should put a bill on the floor immediately aimed at preventing taxes from rising on middle-class families and jobless benefits from expiring on two million people. Reid later said he would set a last-ditch vote for Monday — New Year’s Eve — on the fall-back plan.

“Let’s not miss this deadline,” Obama said. “That’s the bare minimum we should be able to get done.”

The furious, last-minute negotiating and involvement show how both sides fear the political fallout of failure. Obama will need to worry about the ramifications on the economy and having to manage a potential recession in his second term if economists’ predictions ring true. McConnell fears that Republicans will have a much weaker hand next Congress and could suffer a disproportionate amount of blame if no deal is reached.

At the White House meeting, Obama argued that his plan to let taxes rise for families who earn more than $250,000 would win a majority vote in both chambers. But that means House Speaker John Boehner would need to allow the bill to pass with a majority of Democrats, something the Ohio Republican has strongly rejected.

The big-ticket item hanging over the Reid-McConnell talks will be the income level at which taxes can rise. Boehner failed to win sufficient GOP support for a plan to increase taxes for income over $1 million, and Obama has previously upped his offer from $250,000 to $400,000. McConnell and Reid are also trying to agree on the level to set taxes on estates that are transferred after the death of an owner.

At the meeting, Boehner made clear any efforts to eliminate pending cuts to defense and domestic programs — about $109 billion next year — must be replaced by spending cuts to other programs. Republicans later said it appeared that the so-called sequester would not be addressed in a final agreement. A final deal appears unlikely to include an increase of the $16.4 trillion national debt limit, which will be reached on Monday, meaning that Congress will almost certainly renew the battle over taxes and spending immediately in the new year.